Harel Insurance Investments & Financial Services : Summary of Financial Results - Q3 - 2023

SUMMARY OF FINANCIAL RESULTS

For the Period 9M.23 | November 28, 2023

This document has been prepared by Harel Insurance Investments and Financial Services Ltd. (hereinafter: the Company) solely for the purpose of presenting the Company's business.

The information contained in this document has not been independently verified. No representation or warranty has been expressed or implied and there should be no reliance on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the Company nor any of its employees or representatives shall bear any liability whatsoever (whether due to negligence or otherwise) for any loss howsoever resulting from using this document or its content or otherwise arising in connection with this document.

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Statements concerning the Company's future business, financial position and results of operations are subject to risks and uncertainties, which may cause actual results to differ materially from those forecasted. Such forward-looking information includes, but is not limited to, product demand, pricing, changing economic conditions, product and technology development risks, the effect of the Company's accounting policies as well as certain other risk factors which are specified from time to time in the Company's reports to the Securities Authority.

2

IRON SWORDS Message from the Chairman

Israel is currently facing one of the most difficult, if not the most difficult, periods in the nation's history The horrific terror attack launched on October 7, the festival of Simchat Torah, shocked the entire country and Israeli society, and the aftereffects of this day will remain with us for many years to come.

Since that day, Harel Group has been busy working on behalf of Israel's civilian population, with particular emphasis on the Gaza Envelope communities, as well as the defense forces and the IDF. The Group's actions involve money as well as volunteer assistance for any and every need emerging in the field - education, the economy, agriculture, security, employment, etc.

We are looking forward.

Despite the immense pain and distress, we are looking forward to a better future. The State of Israel is a miracle that was established here 75 years ago and it is the life mission of all of us to ensure the continuity of this miracle in the best possible way. To continue to foster a strong, united Israeli society that will ensure a country that is even better than it was preceding the events of October 7.

Now more than ever, we firmly believe in the strength and future of Israel's economy and we are certain that our country's economic strength, thanks to its human capital, will prevail in the face of this difficult period as well. We are extremely proud of our forthcoming investment in Isracard (assuming that it is approved by the regulatory authorities), which is an expression of trust in the State of Israel and its future.

We mourn the victims murdered on that wretched day, our heart goes out to the families whose sons and daughters have fallen in battle, we pray for the return of the hostages and speedy recovery of all those injured.

Now more than ever, we are certain that Israel's spirit is our insurance here in the State of Israel.

Yair Hamburger

Chairman, Harel Insurance

Investments & Financial Services

3

THE BIG PICTURE

Data at September 30, 2023

29.1NIS bn, 9M.23	412 NIS bn	167%At June 30, 2023			Aa2.il
GROSS PREMIUMS	ASSETS UNDER	SOLVENCY RATIO			HAREL INVESTMENTS
EARNED,	MANAGEMENT	Including the tr ansitional			Midroog
Benefit Contributions and		provisions Aa2 RATING	Over
amounts received for		HAREL INVESTMENTS	4 MILLION	ilAA+
Investment Contracts		AA+ RATING	customers
397 NIS m, 9M.23	271 NIS m, Q3.23	HAREL INSURANCE
8.7NIS bn			HAREL INSURANCE
		S&P Maalot
COMPREHENSIVE	COMPREHENSIVE	SHAREHOLDERS
INCOME AFTER TAX	INCOME AFTER TAX	EQUITY		PLATINA PLUS
Attributed to the	Attributed to the
shareholders	shareholders
claims in the life assurance sectors is estimated at NIS 50 million before tax. At this stage, it is impossible to assess the full		Rating by MAALA CSR
	9 years in a row
From the outbreak of the Iron Swords War and up to publication of the financial statements, the increase in the cost of
extent of the impact of the War on the Company and its results.

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KEY HIGHLIGHTS FOR THE PERIOD

CONTINUOUS PROFITABILITY GROWTH

INTEREST RATE

INCREASE

OVERALL

UNDERWRITING IMPROVEMENT

PREMIUMS AND

AUM GROWTH

UNDERWRITING IMPROVEMENT IN MOTOR

UNDERWRITING IMPROVEMENT IN HEALTH

In Q3.23 shareholders' comprehensive income was NIS 271 million, reflecting ROE of 13%, compared with a loss of NIS 249 million in Q3.22. In 9M.23 shareholders' comprehensive income was NIS 397 million compared with a loss of NIS 359 million in 9M.22

In Q3.23 interest rate increase led to decrease of NIS 312 million in the insurance liabilities in life assurance, health and non-lifeinsurance

Given zero Nostro yields, the improvement in profitability was mostly attributed to improved underwriting in the operating segments, as part of the implementation of the Company's strategy to improve core profitability, as well as to interest rate effects

Premiums, benefit contributions and amounts received for investment contracts increased by 7% in

Q3.23 and by 3.3% in 9M.23. AUM increased by 13.3% from YE2022 to NIS 412 billion

Continuous decline in the average cost of claim and further portfolio optimization in compulsory motor, offset by previous years claims development. Increase in average premium and decrease in provision for premiums deficiency in motor property

Mainly in group policies and cover for medications, that was offset by increase in ambulatory cover claims

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PROFIT ALSO GIVEN ZERO REAL YIELD

Total Profit (Loss) Excluding Special Items* (NIS m)

Nostro Yields For The Periods

	274		406	197
	77
(247)		(355)
(425)
		(1,246)
Q3.22	Q3.23	9M.22	9M.23

Profit (loss) excluding special items		Profit (loss) for the period

	Q3.22	Q3.23	9M.22	9M.23	5-Y
					Average
					2018-2022
Nominal Nostro Yield	(0.1%)	0.8%	(0.1%)	3.2%	4.7%
Real Nostro Yield	(1.4%)	0.0%	(4.5%)	0.0%	3.0%

Given real zero Nostro yield and excluding special items, the profit is stemming from

improvement in underwriting profitability, as part of implementation of the

Company's strategy to improve core profitability

*Special items refer to profit or loss that is not part of the normal course of the Company's business, including actuarial changes resulting from studies and changes in the actuarial

6models, as well as impact of the interest rate and extraordinary effects resulting from the amortization of surplus costs created in the process of business combinations and extraordinary expenses due to implementation of the "Harel 2030" multi-year strategic plan

CONTINIUOUS ACTIVITY GROWTH

Gross Premiums Earned, Benefit Contributions And Amounts Received For Investment Contracts (NIS bn)

+14%

33	37.5
3.9
3.9	4.7
3.8

11.8

10
4	4.7

5.45.9

5.96.5

+3%

28.2 29.1

2.2

3.3	3.5
3.4
8.6	10.0
3.4	3.7
4.4	4.8
5.1	4.9

+7%

9.4	10.1
1.0	0.8
1.2
1.1	3.6
3.1
1.2	1.3
1.5	1.7
1.5	1.5

9M.23 vs. 9M.22:

Pension and	+13%
Provident Deposits
Health Insurance	+9%
Non Life Insurance	+7%
Life Assurance	(3%)

2021	2022	9M.22	9M.23	Q3.22	Q3.23
YTD9.22	YTD9.23
LIFE ASSURANCE				HEALTH INSURANCE
NON-LIFE INSURANCE*			PENSION FUNDS CONTRIBUTIONS
PROVIDENT FUND CONTRIBUTIONS			AMOUNTS RECEIVED FOR INVESTMENT CONTRACTS

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*Including results of overseas insurance segment

NIS 412 BILLION AUM

412

			362	363	15
			63
			16	15
	283	291	43	43	62
235	15	13	53	56
39
44
13
	44
34	45			144
	126	128
39
	87
	76
62
87	103	108	124	121	128
2018	20199	2020	2021	2022	YTD930.9.23.23
INSURANCE				PENSION FUNDS
PROVIDENT FUNDS			MUTUAL FUNDS
PORTFOLIO MANAGEMENT AND OTHER*

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*Including financial assets issued by the group and managed in portfolios

Continuous Growth in AUM

75%

since 2018

ANOTHER QUARTER OF PROFITABILITY GROWTH

Comprehensive Income (Loss) After Tax Attributed To The Shareholders (NIS m)

282		271
	33	93

(249)
Q3.22	Q4.22	Q1.23	Q2.23	Q3.23

Return on Equity (In Annual Terms)

14%		13%
	2%	4%

(12%)
Q3.22	Q4.22	Q1.23	Q2.23	Q3.23

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KEY DRIVERS OF Q3.23 PROFIT

Composition Of Comprehensive Income Before Tax (NIS m)

Improved real yields in Nostro portfolio compared with corresponding period in 2022: zero yield in Q3.23 compared with negative yield in Q3.22

Underwriting improvement in the following: Compulsory motor and motor property, group health policies and medications cover in the health segment

Increase of the interest rate curve applied in calculation of the insurance liabilities in non-life and health insurance** led to

reduction of NIS 94 million in the insurance liabilities

Update of the interest rate used in calculation of insurance reserves in life assurance and long-term care insurance*** led to reduction of NIS 218 million in the

insurance liabilities

	* Including results of overseas insurance segment
10	** Increase of the risk free interest rate curve, decline of the illiquidity premium and changes in the difference between the fair value and book value of the non-marketable assets in
non-life insurance

*** Annuity and work disability reserves in payment in life assurance and reserves for claims in payment in long-term care insurance